Most CFOs know that their job, like life itself, is somewhat tenuous. They could get a great job offer from another company, be hit with a dire family emergency, or find themselves tapped as CEO tomorrow — all eventualities that focus attention on the need for succession planning today. While most finance chiefs would say that identifying a replacement is a priority, though, not all practice what they preach.
When Robert Half Management Resources asked 1,400 CFOs last July if they had a process in place for grooming their successor, for example, 38 percent said they did, but 58 percent said they did not. Yet whether a company’s approach to succession is formal, informal, or nonexistent, one question CFOs often ask is whether someone would be available to step into the job effectively — if only on an interim basis — were disaster to strike. “I may not know the exact order of succession if I get run over by a truck tomorrow,” says Linda Dimopoulos, appointed in December as CFO of Darden Restaurants Inc., but she says she’s “very comfortable” knowing that she’d be replaced quickly and competently at the Orlando-based operator of Red Lobster, Olive Garden, and other chains.
Other CFOs are equally comfortable with identifying a potential replacement, but few see the need to name that person in advance. In fact, CFOs generally prefer to leave the field at least a little open-ended. “Every position has a number of potential replacement candidates,” says Michael Gersie, CFO of Principal Financial Group, based in Des Moines. In fact, he estimates that each position — CFO included — has at least three to five potential successors. “It has nothing to do with competition,” he says. “It’s just that who knows what the future will hold?”
Succession plans, however, are all about shaping that future. And some hallmarks of highly developed company practices, including Darden’s and Principal’s, such as job rotation, operations exposure, and training to improve such soft skills as negotiating, if necessary. Further, succession-minded finance chiefs agree that at a certain level, some of the best grooming involves including candidates in strategy sessions and allowing them to serve as “temporary CFOs” when the opportunity arises. And to make it work, the sitting CFO has to be willing to entertain multiple “what-if” scenarios.
A CFO Charts His Promotion
In Vicky Lynch’s case, her predecessor paved the way for her promotion to CFO at Giga Information Group, giving her, step by step, the necessary autonomy and responsibility. He “expected people to take the initiative,” and to identify areas in which they needed development, she explains. Then, once mutual confidence was established, he began to delegate. While she was still corporate controller, “he first offloaded budgeting, then financial analysis, then order-administration and order-processing” on her. Next, he included her in management-level initiatives. The result: when the CFO slot opened up at the Cambridge, Massachusetts-based global IT advisory firm, says Lynch, her predecessor was “pretty confident in my day-to-day capabilities and I was a known entity to the board members, CEO, and management team.”